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Canadian Unitarian Council
The Canada Revenue Agency (CRA) has told the Canadian Unitarian Council (CUC) that it can no longer work for justice in the world. The CRA’s recent compliance letter forced the Unitarians to amend their bylaws deleting any reference to “justice” or “social justice.” This is an unexpected development given Prime Minister Trudeau’s Mandate Letter to Revenue Minister Diane Lebouthillier directing her to implement a policy to “allow charities to do their work on behalf of Canadians free of political harassment,” and Minister Lebouthillier’s announcement in January that the CRA’s political activities audit program for charities was to be wound down.
According to the Federal Income Tax Act, a charity must “devote all of its resources to charitable purposes and activities.” The Canada Revenue Agency’s (CRA) policy establishes that charities are not allowed to spend more than 10% of their annual revenue for political activities. Political activity is defined to include any communication or call to action that urges people to “retain, oppose, or change the law, policy, or decision of any level of government in Canada or a foreign country.” To ensure that a charity is complying with all applicable legal requirements (including the rules about political activities), the CRA may perform audits and, if it finds that the charity is non-compliant, may revoke an organization’s charitable status. Revocation of status has significant consequences for a charity, including tarnishing the organization’s reputation and making it harder for it to raise funds since it is no longer allowed to issue tax receipts.
On March 29, 2012, the federal government outlined its 2012 budget, in which it allocated $8 million – later increased to $13.4 million – to the CRA in order to allow the agency to “investigate the activities and registered status of selected charities.” The aim of providing the CRA with additional funding was to ensure charities’ compliance with respect to their political activities through a series of political activities audits. While the CRA maintains that its “targeting decisions are neutral, non-partisan and balanced,” it acknowledged that its decisions are often influenced by the media and the complaints that are submitted to it.
Environmental groups were among the first targeted by the political audit campaign. This is not surprising since earlier that year, on January 9, 2012, then-natural resources Minister Joe Oliver wrote an open letter in which he called environmental groups “radicals” who “threatened to hijack our regulatory system.” Shortly after the 2012 budget was released, Ethical Oil, a not-for-profit organization with well-documented links to the Conservative Party of Canada, began filing complaints against Canadian environmental charities. The CRA responded by initiating a series of audits, which left many of the country’s most prominent environmental charities coping with onerous documentary requirements.
The “blitz” of political-activity audits that followed the CRA’s increased budget expanded to include human rights, international development, social welfare and research/education charities. Many commentators believe that these political audits have had a “chilling effect” on the work of these environmental and progressive organizations, suggesting it is likely that charities will change their approach to advocacy and will reduce their presence in public debate in order to avoid CRA audits and the associated threat of revocation of their charitable status. The possibility of a chill on advocacy is important because these charities provide expertise and represent the voices and concerns of millions of Canadians. This makes their presence in public policy debates indispensable for a healthy democracy. As such, the silencing of charities in this way silences the voices of many Canadians on key issues.
Since the onset of the political activities audits, charities have pushed back. Charities and environmental groups have come together to challenge the audits by creating a petition asking federal leaders to establish new policy and law that would enhance and protect the participation of registered charities in public policy debates.
Some observers have expressed a growing concern that the audits are politically biased. Though privacy rules prohibit the CRA from disclosing which organizations are under audit, so far only progressive charities or those that are critical of the former Conservative government’s policies have come forward and stated that they are under audit. While both the CRA and the government deny accusations of bias, the situation has raised serious questions about how the regulation of the charitable sector might better uphold the values of transparency, democracy and free speech. For a more detailed discussion of the background of this case study, see Voices-Voix's case study, Canadian Charities and the Canada Revenue Agency.
The plight of the Canadian Unitarian Council
Many charities which looked to the Trudeau government and the Liberal party, whose campaign platform pledged to end “political harassment” of charities, were disappointed when the Revenue Minister, Diane Lebouthillier, announced the existing 24 political audits would proceed without government intervention. Additionally, the Minister stated that the revocation of charitable status to five groups would remain. However, it is important to note that proposed political audits on six undisclosed charities were cancelled. (CBC, 2016)
No substantive changes have occurred to the CRA’s political audits program, despite Prime Minister Justin Trudeau’s Mandate Letter to Minister Lebouthillier. The Mandate letter directs the minister to work with the Minister of Finance to modernize the rules governing charities including “clarifying the rules governing ‘political activity’ with an understanding that charities make an important contribution to public debate and policy.”
Meanwhile, the Canadian Unitarian Council's plight remains. According to Vyda Ng, the executive director of the Canadian Unitarian Council, the CRA audit process started in January of 2015 and is still currently active.
As reported by the CBC, the Canadian Unitarian Council was informed by the CRA that their state mission in their bylaws to "work for justice in the world" is too vague, prompting the CUC to amend their statutes in May 2016. This, despite Industry Canada having approved the bylaws only three years earlier, in 2013.
Like other charities, the uncertainty and drain on resources caused by the CRA's political acitivites audit has had a strong impact on the CUC, including on their ability to continue to work for social justice.
"I have been extremely concerned about this audit process," Ng told the CBC in an interview. "It started in January of 2015. We're in the middle of 2016. We're still in the process."
The CUC also consulted lawyers about including, “promoting justice and human rights practices” as opposed to “work for justice in the world.” However, their lawyers warned them that promoting human rights could also be seen as a political purpose.
The ongoing restraints on Canadian charities
The continued restraints on charities being able to engage in their work, as indicated by Lisa Lalande of the University of Toronto’s Mowat Centre’s On the mend study, is due to several reasons. The first is the vague wording of the of the CRA’s rules on political activities. As indicated on the official policy of the CRA website (http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-022-eng.html#political), political activity is ambiguously defined, thus forcing charities to make inferences on the appropriateness of their actions or hire tax lawyers to ensure no violations of rules. (The Star, 2016)
Lalande further explains that the CRA perceives charities not as “as boundary-pushers, not problem-solvers, not contributors to public policy, certainly not partners of the government,” (The Star, 2016) hence the reason why these audits continue to occur. Federal regulators do not examine the core purposes, overall benefits and motivations of the charities, instead, they simply restrict those organizations who do not abide by their interpretation of the rules.
Professor Lalande’s On the mend study points to both the UK and New Zealand as offering a vision of what might be done. “In the UK, charities are permitted to engage in political activity as long as it is “part of a ‘wider range of activities aimed at furthering the organization’s charitable purposes.’” In 2014, a court ruling in New Zealand expanded the definition of charitable purpose to include political activity, provided the organization “still demonstrate[s] that its purposes and all its activities provide benefits to the public or a sufficient section of the public, not just to an individual, organization or closed group, as well as being charitable.”
- January 2012: Then-federal Minister of Natural Resources Joe Oliver denounces “environmental and radical groups” funded by “foreign special interest groups” were working to undermine Canada's economy.
- March 2012: The federal budget allocates $8 million to investigate the charitable status of select groups. This is later topped up to $13.4 million.
- September 2014: Over 400 academics send an open letter to the Minister of National Revenue, and the Director General of the Charities Division, Canada Revenue Agency, charging that the audit of the CCPA is politically motivated to intimidate and silence its criticism of your government’s policies.
- October 16, 2014: As of this date, some 52 organizations have been chosen for audits under the new program, with at least another 8 on the way.
- January 2015: Audit of Canadian Unitarian Council begins
- February 10, 2015: A group of 18 organizations write an open-letter to the federal government and the opposition parties, asking for a commitment to laws and policy that guarantee that charities can participate fully in public policy debates.
- December 2015: Prime Minister Justin Trudeau writes mandate letters to the Minister of National Revenue and the Minister of Finance, instructing them to reform the CRA policies and charity treatments.
- January 20, 2016: The Minister of National Revenue announces the winding down of the special audits program. Audits that have not yet begun are cancelled. However, groups whose audits have already begun – including the CUC – will continue through the process.
- July 03, 2016: The Canadian Unitarian Council reveals that the Canadian Revenue Agency has instructed them that working for social justice violates their charitable status.
Role or Position
The Canadian Unitarian Council is one of Canada's foremost spiritual organizations working toward social justice. It registered as a charity in 2013.
Implications and Consequences
- Democracy: As was noted in our Oxfam Canada Study No. 101, “ An open and purposive interpretation of fundamental freedoms such as freedom of association should mean that charitable organizations have the right to organize, to engage in public debate and decision making, and to advocate for policy changes without these activities being considered as “political.”
- Free Speech: The continuing barriers to charities openly speaking about their efforts to benefit human rights, including social injustice, not only hinders their ability to speak, for many, it undermines their core public purposes.
- Human Rights: The continuing restrictions on charities strike at their capacity to defend human rights. Charities that focus on ‘promoting appropriate justice practices,’ such as the Canadian Unitarian Council, or ‘poverty prevention’ such as Oxfam Canada and Credit Counselling Services of Atlantic Canada Inc (CBC, 2016) are now unable to freely engage in these activities, thus preventing those in need from receiving the necessary care. Harriett McLachlan, president of Canada Without Poverty, pleaded in front of the UN Human Rights Council in 2015 that a “special audit program launched by the tax agency in 2012 violates Canada's international commitments on human rights.”(CBC, 2015 http://www.cbc.ca/news/politics/canada-without-poverty-charity-challenges-harper-govt-audits-at-un-in-geneva-1.3136289) McLachlan indicated that the rule allowing only 10 percent a charity’s revenue to be used in political activities prevents them from being able to hold the government accountable. (CBC, 2015)
- Transparency: Though the Canada Revenue Agency provides a definition of political activities in their “Political Activities” policy statement, it does not explicitly indicate exactly what constitutes political activities. (CRA, 2012 http://www.cra-arc.gc.ca/chrts-gvng/chrts/plcy/cps/cps-022-eng.html#politicalactivities6-2) As a result, charities experience a chilling effect as they try to second guess what the CRA might consider to be too “political” when they seek to advocate on behalf of their central public purposes. This lack of transparency restrains charities from holding the government accountable, from informing the public on social issues, so as to hold the government accountable for their actions.